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EUROPEAN COURT OF AUDITORS

PRESS RELEASE

ECA/13/42

Luxembourg, 10 December 2013

“Improvements needed in checks on data for Member States’ budget contributions”, say EU Auditors

A report published today by the European Court of Auditors (ECA) calls for the Commission to focus its checks on major components of Gross National Income (GNI) provided by Member States and on those where there is a risk that the quality of data may be lower. The recommendations in the report would help ensure that the Member States’ contributions to the EU budget are correctly calculated and fairly based. It would also improve the effectiveness of the Commission’s work. The Commission has accepted the need for action.

The EU budget is financed from own resources and other revenue, of which the revenue derived from Member States’ GNI source has increased from around 50 % of the budget in 2002 (€ 46 billion) to 70 % in 2012 (€ 98 billion).

GNI based own resources are the source of revenue balancing the EU budget. Any overstatement (or understatement) of GNI for a particular Member State has the effect of decreasing (or increasing) the respective contributions from the other Member States.

“One might expect that the Commission’s verification would ensure the quality of Member States’ GNI data. However, the Court concludes that verification work was not sufficiently structured and focussed”, said Milan Martin CVIKL, the ECA Member responsible for the report. “Although we found cases of non-compliance and lack of quality in the audited verification cycle, the effectiveness of the Commission’s work in the next cycle after September 2015 is likely to be improved through the implementation of our recommendations.”

The audit examined the effectiveness of the Commission’s verification of GNI data in relation to the years 2002 to 2007 used for own resources, which became definitive in 2012. The audit criteria used for assessing the Commission’s performance are based on a set of good verification practices drawn up by the ECA taking into account the EU rules and relevant internal control principles.

The ECA concluded that the Commission did not plan and prioritise its work in an appropriate way, did not apply a consistent approach when carrying out its verifications in Member States, and did not carry out sufficient work at Member State level. Moreover, the verifications were not adequately reported

Notes to the editors:

European Court of Auditors (ECA) special reports are published throughout the year, presenting the results of selected audits of specific EU budgetary areas or management topics.

This special report (SR 11/2013) is entitled ““Getting the Gross National Income (GNI) data right: a more structured and better-focussed approach would improve the effectiveness of the Commission’s verification”. The ECA examined whether the Commission’s verification of GNI data used for own resource purposes was well structured and focussed.

The EU budget is financed from own resources and other revenue. There are three categories of own resources: traditional own resources (customs duties collected on imports and sugar production charge), own resources calculated on the basis of Value Added Tax collected by Member States, and own resources derived from Member States’ GNI.

GNI is a macroeconomic measure of national wealth. It is used as the basis for calculating the largest source of the EU budget. Unlike GDP, it includes net income from abroad.

The audit examined the Commission’s verification of a sample of 10 (of the EU-25) Member States’ GNI data for the period 2002–2007, focussing on the Eurostat (the Statistical Office of the EU) checks on the procedures and basic statistics used by Member States to make estimates of the components of GNI. This verification cycle was completed in January 2012.

The ECA concluded that the Commission’s verification of GNI data was not sufficiently structured and focussed. The Commission did not plan and prioritise its work in an appropriate way, did not apply a consistent approach when carrying out its verifications in Member States, and did not carry out sufficient work at Member State level. Moreover, the verifications were not adequately reported.

The conclusions and recommendations derive from the application by the ECA of good practices of verification arrangements focussing on material components and those where there is a risk that the quality of data may be lower. These practices form a more structured and formalised approach than the one currently used by Eurostat. As the number of GNI components to be selected for in-depth verification may be tailored to the resources available, there need be no increase in Eurostat staff resources dedicated to the verification of GNI data.

Based on its findings, the ECA recommends that the Commission:

  • carry out a structured and formalised analysis that takes into consideration costs and benefits allowing it to better plan and prioritise its verification work;

  • shorten the duration of its verification cycle in order to limit the use of ‘general reservations’ that delay the final calculation of GNI-based contributions, leading to possible budgetary uncertainty in Member States;

  • pay particular attention in its verifications to the exhaustiveness of Member States’ GNI and the use of comparable estimation procedures;

  • where possible, assess the potential impact and/or the amount at risk of its findings and set clear materiality criteria for placing ‘specific reservations’, to tackle an issue with Member States’ National Statistical Institutes;

  • report in a more complete, transparent and consistent manner on the Member States’ GNI data and on the management of GNI-based own resources.

Contact:

Aidas Palubinskas

Press Officer European Court of Auditors

Desk: +352 4398 45410 Mobile: +352 621 552224

press@eca.europa.eu www.eca.europa.eu Twitter: @EUAuditorsECA


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